Hospitality reasserts calls for business rates reform in wake of ‘disappointing’ Budget

16-Mar-2023 - Last updated on 16-Mar-2023 at 13:46 GMT

Hospitality leaders have reasserted calls for the Government to reform business rates, after the Chancellor ignored industry-wide calls for an overhaul of the current system in his Budget.

Jeremy Hunt’s lack of comment on business rates yesterday (15 March) has been described as ‘desperately disappointing’ and led to warnings that businesses will likely see 5% increase in their business rates bills in April 2024.

In his Budget, the Chancellor announced measures including an extension of the Energy Price Guarantee for households; substantial changes to childcare; and major reforms to support people back into work.

However, in a blow for hospitality, he fell short of addressing some of the main challenges directly facing the operators, with the only help targeted at the sector being an extension of draught relief from 5% to 9.2%.

Calls to reform the ‘outdated business rates system’ formed part of an open letter signed by 155 hospitality leaders prior to the Budget, which urged the Chancellor to take immediate action to ‘unshackle’ the sector and ‘unleash its potential’.

Campaigners warn rates could rise

Property agency Colliers has been long-time campaigner for business rates reform on the grounds that the current system, which provides £28bn (net) for local authority funding, is not fit for purpose, penalises the retail and hospitality sectors, and deters businesses from expanding and investing.

John Webber, head of business rates at Colliers, said: “The Government’s lack of comment on business rates in its Budget is desperately disappointing – with no reassurance that it has engaged with the industry, despite the fact the new 2023 Revaluation list becomes live in two weeks’ time.”

As part of his Autumn Statement in November last year, Hunt confirmed that the Government would go ahead with a revaluation of properties for business rates, and provide a £13.6bn package of support 'to soften the blow'. The multiplier has been frozen for the 2023-24 financial year with relief for the retail, hospitality and leisure sectors increasing from 50% to 75%, up to £110,000 per business.

Webber noted that the Chancellor said nothing in his Budget yesterday about freezing the multiplier in the next financial year (2024-25).

Although Hunt is predicting inflation to be 2.9% by the end of 2023, business rate rises are decided on CPI (consumer price index) levels at the end of September. According to Webber, these are still likely to be around 5% at that time, meaning retail and hospitality businesses will most likely be seeing a 5% rise in their rates bills in April 2024.

Leaders demand action

Hospitality leaders from across the sector have equally expressed disappointment at the Chancellor’s lack of action over business rates reform, and reasserted calls for the current system to be overhauled.

Martin Williams, CEO of the Rare Restaurants group, which owns the Gaucho and M Restaurants brands, said that business rate reform is crucial to the survival of entrepreneurs, start-ups and the high street.

Meanwhile, BrewDog co-founder James Watt wrote on LinkedIn that the Chancellor should have cut business rates in half for all of hospitality for the next 12 months.

“Business rates are antiquated, and we need a review anyway,” he added.

Lionel Benjamin, co-founder of AGO Hotels, also expressed disappointment.

He said: “At AGO Hotels we are calling for a comprehensive review and reduction of the widely outdated system of business rates.

“For the hospitality sector to thrive and survive we need more.”